4GB is plenty, even 2GB would work.
Windows 8 would be better, however i don't consider a "HTPC" really that good for easy media playback.
I'd need more information for better advice but I recommend something more like THIS:
http://www.wdc.com/en/products/products.aspx?id=330
Then add the 2TB WD Elements USB drive.
Compatibility list: http://wdc.custhelp.com/app/answers/detail/a_id/2581/related/1/session/L2F2LzEvdGltZS8xMzk3NTAwMDkyL3NpZC84RDFNRk5SbA==
I like this one:
http://www.ncix.com/detail/western-digital-wd-2tb-elements-a6-95503-1018.htm
I have a separate BluRay player for all my DISC needs, and use the Western Digital drive for everything else.
- can copy/paste files via network (or move USB drive to PC then back)
- supports ISO image files for DVD or BluRay (ripped some DVD's for my sister's kids using DVD Decrypter, then Imgburn.)
- plays all the MKV, MP4 etc files I've found
- Netflix etc.
- adds Thumbnails, and description if desired for movies
*You want something that can easily turn on and off, and navigate with a remote control.